Pension accuracy slips as OPM picks up pace

May. 8, 2013 - 06:00AM
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The accuracy of the Office of Personnel Management’s calculation of new federal pensions has slipped as it has worked to speed up its retirement processes, the agency’s inspector general is set to testify Thursday.

In advance testimony posted online Wednesday by the House Oversight and Government Reform subcommittee on the federal workforce, OPM IG Patrick McFarland said that the agency hoped to process 95 percent of its retirement claims accurately. But the accuracy rate fell from 91.7 percent in 2011 to 90.9 percent in 2012, and again to 90.6 percent in the first quarter of 2013. That is concerning, McFarland said, because the loss in accuracy means hours are lost recalculating pensions, and results in improper over- or underpayments to retirees.

Thursday’s hearing will examine OPM’s progress toward solving a problem that dates back to the 1980s: the government’s sluggish processing of federal retirees’ pensions. Most new retirees have had to wait for months — in some cases, more than a year — while OPM processes their pension claims, and in the meantime must get by on interim pensions that are sometimes roughly half of what they are owed.

Former OPM Director John Berry in January 2012 unveiled a new plan to fix the problem. Berry’s plan relied on hiring 56 new specialists to process claims and 20 new customer service specialists, increasing the use of overtime, streamlining the steps involved in processing pensions through two Lean Six Sigma reviews, helping other agencies improve the accuracy and completeness of their employees’ retirement claims, and putting incremental information technology improvements into place.

Putting similar IT improvements in place have proved difficult for OPM in the past. The last effort to create an automated retirement processing system, called RetireEZ, was canceled in 2008, shortly before it was due to launch, when testing showed it didn’t work.

In his prepared testimony, Ken Zawodny, OPM’s associate director of retirement services, said that OPM wants to transition the current paper-based process to a paperless system that will help OPM accurately calculate pensions, answer customers’ questions quickly, and allow feds to access and view and update their own retirement information through a computer, tablet or mobile device. Currently, federal employees have limited access to their retirement records, the Government Accountability Office said, which makes planning for retirement difficult.

Zawodny said OPM launched a web-based program called Data Viewer that pulls information from several systems around the government and allows adjudicators to access scanned retirement documents and other data. He said 11 agencies are now piloting Data Viewer, which will help agencies assemble more accurate retirement packages before they are sent to OPM.

One of the major problems with the government’s pension calculation efforts is that agencies frequently submit retirement packages with incomplete or inaccurate information. This forces OPM officials to track down or correct those documents before they can start calculating a pension. OPM hopes Data Viewer will help solve that problem.

In its fiscal 2014 budget, OPM also asked Congress for $2.6 million to start creating a case management system (CMS) to centralize tracking of retirement documents and cases.

“This initial, modest investment is to begin the process of upgrading CMS to an automated system, eventually streamlining the intake and review process and in the long-term reduce the amount of time necessary to process claims,” Zawodny said in his prepared testimony.

But Valerie Melvin, the Government Accountability Office’s director of information management and technology resources issues, said in her prepared testimony that OPM relies on more than 80 IT systems around the government to help process retirement claims — many of which are antiquated and have about 3 million lines of custom programming to be maintained.

OPM’s plan does not say whether or how the government intends to modify or decommission those 80-plus systems.

OPM has cut its pension backlog in half since releasing its plan, from 61,108 unprocessed claims in January 2012 to 30,080 last month.

McFarland acknowledged that OPM is making progress toward eliminating that backlog, but said it must do more to ensure it is collecting and reporting accurate information on that backlog. For example, McFarland said his auditors could not verify the number of claims received and processed that OPM reported in June 2012.

And McFarland said OPM may not be accurately calculating the time it takes to process retirement claims. He said that OPM reported it processed retirement claims in 125 days on average, but IG auditors found the average was 131 days.

Zawodny said in his testimony that the average time to process a retirement claim fell from 156 days in 2011 to 136 days in 2012.

OPM said in an April 30 e-mail to Federal Times that in the first quarter of fiscal 2013, it processed retirement claims in an average of roughly 77 days.

By the end of July, OPM hopes to process 90 percent of its cases within 60 days. But in her testimony, Melvin said that is a substantial decrease from its 2009 goal of processing 99 percent of cases within 30 days.

OPM on April 29 announced the sequester’s budget cuts had forced it to cancel the overtime it relied upon to speed up pension processing, which would slow the calculation of annuities. In his testimony, Zawodny said OPM used 94,000 hours of overtime in 2012 to process pensions and said it is critical, but did not address the overtime cuts.